Including a gain on special items of $350 million, net
income was $262 million, or 69 cents a share, the Fort Worth,
Texas-based company said in a statement today. The year-earlier
net loss of $1.1 billion, or $3.27 a share, included $886
million in bankruptcy expenses.

American and its creditors have been evaluating for months
whether the carrier should combine with US Airways or exit court
protection on its own. A resolution should come in “a matter of
weeks,” Chief Executive Officer Tom Horton said on Jan. 3. AMR
sought Chapter 11 bankruptcy in November 2011.

“We are completing our evaluation of whether a merger is
the right step for American at this time,” Horton told
employees in an e-mail today. “Whatever the decision,
customers, investors and our people will benefit from the new
American’s exceptional strengths.”

A combination of American, the third-biggest U.S. carrier,
and No. 5 US Airways would surpass United Continental Holdings
Corp. (3703) as the world’s biggest airline, based on passenger
traffic.

Expenses fell 12 percent, helped by a 13 percent drop in
labor costs. American’s unions agreed last year to changes that
will reduce annual spending by $1.06 billion. The airline also
renegotiated financing terms for more than 400 aircraft and
restructured facility leases and vendor agreements.

‘Feeling Good’

“The financial restructuring effectively is complete,”
Horton, who declined to discuss the proposed merger, said in an
interview. “We’re really feeling quite good about that.”

The company’s loss a year earlier, excluding restructuring
costs, was $209 million.

AMR ended the quarter with $4.7 billion in cash and short-
term investments, including $850 million in funds dedicated to
specific uses. AMR shares, which trade over the counter, rose
0.7 percent to $1.50 at 3:59 p.m. New York time.

AMR’s $460 million of 6.25 percent convertible notes due in
October 2014 rose 0.3 percent to 95.25 cents on the dollar at
2:50 p.m. in New York, according to Trace, the bond-price
reporting system of the Financial Industry Regulatory Authority.

The fourth quarter included a $569 million non-cash income
tax benefit, a $280 million gain from settlement of a commercial
dispute, and costs of $441 million linked to the restructuring
and $58 million for severance, AMR said.

Profit was reduced $142 million by Hurricane Sandy, a
November snowstorm and reduced bookings after a drop in on-time
flights and reports of loose seats on planes. Altogether, those
items pared revenue by $155 million.

Sales fell less than 1 percent to $5.94 billion, in the
quarter and reached a record $24.9 billion for the full year.